MILWAUKEE - A.O. Smith Corporation (NYSE:AOS), a global water technology company, reported a slight earnings beat in its first quarter of 2024, with earnings per share (EPS) of $1.00, surpassing the analyst estimate by $0.01.
However, the company's revenue for the quarter fell short of expectations, coming in at $978.8 million against the consensus estimate of $997.83 million, a decline of approximately 1.9%. The stock experienced a modest drop of 1.52% in premarket trading, reflecting investor reaction to the revenue miss.
The company's first-quarter performance showed a 1% increase in sales compared to the previous year, with a notable 19% rise in EPS. This improvement in earnings is attributed to higher sales of commercial high-efficiency water heaters and lower steel costs in North America, as well as a 6% sales growth in China despite economic challenges. Kevin J. Wheeler, chairman and chief executive officer, expressed satisfaction with the global team's efforts in servicing customers during the quarter.
Looking ahead, A.O. Smith reaffirmed its full-year 2024 outlook, projecting a sales increase of 3% to 5% and an EPS range of $3.90 to $4.15. The midpoint of the EPS guidance range, $4.025, falls below the analyst consensus of $4.07, indicating a slightly conservative stance from the company. The revenue guidance for 2024 is set between $3.97 and $4.05 billion, with the midpoint at $4.01 billion aligning with the analyst consensus.
Wheeler remains optimistic about the company's prospects, citing resilient replacement demand, an improved outlook for residential new home construction, and continued growth in markets like India and China. The company's guidance excludes potential impacts from future acquisitions.
A.O. Smith's commitment to shareholder returns is evident in its share repurchase program, with $74.5 million spent on buybacks in the first quarter and plans to spend $300 million throughout 2024. Additionally, a $0.32 per share dividend was declared for shareholders of record as of April 30, payable on May 15.
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